Thursday, February 17, 2011

Ma Ying-jeou Says “Nihao Dalu”

Taiwan President Ma Ying-jeou celebrated the Year of the Rabbit by instructing all government officials to henceforth stop referring the other side of the straits as “China.” He reasoned that to call the other side China was to imply that Taiwan was not part of China, in violation of the 1992 One-China Consensus subscribed by both sides.

Instead, Ma suggested duian (对岸) meaning the shore across the way or dalu (大陆) meaning the mainland when referring to the big neighbor across the straits—akin to the US continent as the mainland to the Hawaiians.

Ma was elected president in 2008 on the pledge of closer economic cooperation with the mainland and reversing his independent minded predecessor’s tension filled approach of “one China and one Taiwan.”

Ma’s popularity initially tumbled as his economic policy did not bring about the immediate miraculous economic recovery that the impatient people of Taiwan expected. Instead Taiwan in 2009 was as much a victim of the global financial meltdown as most other countries.

However, Ma upon taking office began cross strait talks in earnest culminating in the Economic Cooperation Framework Agreement. Even as details of ECFA were being hammered out, direct flights began and economic cooperation flourished.

The payoff became evident in 2010 when Taiwan’s economy grew by nearly 11%, strongest gain since 1986. Export increased by nearly 35%, over two-fifths of which headed to the mainland. Private sector investments in Taiwan increased by nearly one third, an unprecedented show of confidence in Taiwan not seen for more than 40 years.

Tourism from the mainland to Taiwan, not possible under Chen Shui-bian, Ma’s predecessor, has grown to over 100,000 visitors per month and contributed $3 billion to Taiwan’s economy since Ma opened Taiwan to mainland tourists. In less than two years, mainland Chinese visitors have already become the largest source of tourists visiting Taiwan. In addition to tour groups, Ma’s administration is now exploring a way to allow individual tourists in order to tap into even greater tourism spending from across the straits.

By proclaiming appropriate cross-strait terminology, Ma is betting his political future on the presumption that closer economic cooperation with the mainland will continue to pay off. There are plenty of indications that this will be a safe bet.

Despite the fast growing rate of inbound tourists to Taiwan, the frequency of person visits from Taiwan to the mainland, for business and tourism, is still 4-5 times greater than in the other direction. China sends 57.4 million tourists out of China last year and is expected to overtake the US as the largest source of outbound tourists by 2015. Right now Taiwan is only attracting 2 out of every 100 tourists from the mainland and thus has plenty of upside yet to be realized.

Taiwan companies have invested well over $100 billion on the mainland. Mainland companies have only been recently allowed by the Taipei government to invest in Taiwan. This is timely because only in recent 3-4 years are Chinese companies encouraged by Beijing to make outbound investments. The amount invested in Taiwan to date, around $137 million is not even one percent of total outbound investments. The potential of direct investment from the mainland into Taiwan is huge and can only further stimulate Taiwan’s economy.

Ironically when China first opened to the west after 1972, foreign visitors were admonished not to use the term dalu or mainland but China or People Republic of China in order not to suggest separateness between Taiwan and the mainland. Now the use of the term seems to suggest closer cooperation between the two sides.

No one seems to care as to how long the two sides will remain separate or if they will actually reunite. In the meantime, Ma is betting that continued economic improvements in Taiwan will win the peoples’ confidence in him, enough to ensure his reelection.

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George came to the U.S. as a child from China, grew up in Seattle and educated at MIT, Stevens Institute and Santa Clara Univ.
Dr. Koo has recently retired from a world leading advisory services firm where he advised clients on their China strategies and business operations. He is founder and former managing director of International Strategic Alliances.
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Dr. Koo is a frequent speaker in various public forums on China and U.S. China bilateral relations. He writes for Pacific News Service (New America Media) on issues relating to Chinese Americans and to U.S.-China relations.
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